CHS to Munroe: We will honor lease with HMA

Published: Friday, August 2, 2013 at 2:19 p.m.

Last Modified: Friday, August 2, 2013 at 2:19 p.m.

Community Health Systems moved Friday to reassure executives at Munroe Regional Medical Center that they are as committed to the hospital as Health Management Associates, the company that is negotiating to assume operations of Munroe by the end of the year.

In a letter to the chairman of the Munroe trustees Friday morning, a CHS executive noted that his company is poised to purchase HMA and said that as part of the deal, CHS plans to honor any agreements reached between Munroe and HMA in the coming months.

Trustees for the publicly owned Munroe have been negotiating for the past month to lease the hospital to Naples-based HMA in hopes of reversing Munroe's financial slide.

The effort took a twist this week when CHS, out of Franklin, Tenn., announced plans to buy HMA for $7.6 billion. If that occurs in early 2014 as planned, the lease would transfer to CHS.

Kenneth D. Hawkins, senior vice president for Community Health Systems, said in Friday's letter that his company was aware of HMA's negotiations with Munroe when it set out to buy HMA last year.

Executives have reviewed the terms of the lease outlined in a "letter of intent" between Munroe and HMA, and "are committed to honoring all contracts entered into by HMA before we close our transaction with HMA, which we anticipate to be the first quarter of 2014," he said.

CHS and HMA executives held a conference call with Munroe trustees Friday afternoon and reiterated their commitment to the lease.

They said that when the merger of CHS and HMA is finalized, CHS will be the largest hospital company in the world, with 206 facilities, 31,000 beds and more than 100,000 employees in 29 states.

Twenty-six of those hospitals would be in Florida, so Munroe would become part of a sizable network of health care providers.

And, said Hawkins, CHS "is very focused on quality, physician relationships and employee relationships and doing the right things in the community."

Despite the company's assurances, some Munroe trustees noted that they are not as familiar with CHS as they are with HMA, which impressed them with its commitment to patient care.

"I've been to Publix grocery stores and I have a feel for what Publix is like," said trustee David Cope. "And now (HMA) are being bought out by someone who's bigger than them and I don't know whether they're a Walmart, a Target or a Whole Foods."

Trustee Chairman Jon Kurtz said he planned to organize trips to some of CHS' hospitals to investigate how the company runs its facilities and get a feel for its "culture."

In the meantime, Kurtz, hospital attorneys and consultants will continue hammering out a lease with HMA.

These negotiations are considered crucial because the lease will spell out not just HMA's — ultimately CHS' — monetary commitment to Munroe but also its obligations to provide certain kinds of services and live up to specific quality standards.

Trustees and HMA had hoped to have the lease finished by the end of August, spend 60 days reviewing the completed product and then sign off on it at the end of October.

That time frame could be pushed back a bit as trustees work to familiarize themselves with CHS.

Munroe CEO Steve Purves, who is leaving in a matter of weeks to take over a not-for-profit hospital system near Phoenix, said the deal could bolster Munroe significantly.

"At the end of the day, if we do this right, Munroe is going to be positioned stronger than it ever has been," Purves said.

<p>Community Health Systems moved Friday to reassure executives at Munroe Regional Medical Center that they are as committed to the hospital as Health Management Associates, the company that is negotiating to assume operations of Munroe by the end of the year.</p><p>In a letter to the chairman of the Munroe trustees Friday morning, a CHS executive noted that his company is poised to purchase HMA and said that as part of the deal, CHS plans to honor any agreements reached between Munroe and HMA in the coming months.</p><p>Trustees for the publicly owned Munroe have been negotiating for the past month to lease the hospital to Naples-based HMA in hopes of reversing Munroe's financial slide.</p><p>The effort took a twist this week when CHS, out of Franklin, Tenn., announced plans to buy HMA for $7.6 billion. If that occurs in early 2014 as planned, the lease would transfer to CHS.</p><p>Kenneth D. Hawkins, senior vice president for Community Health Systems, said in Friday's letter that his company was aware of HMA's negotiations with Munroe when it set out to buy HMA last year.</p><p>Executives have reviewed the terms of the lease outlined in a "letter of intent" between Munroe and HMA, and "are committed to honoring all contracts entered into by HMA before we close our transaction with HMA, which we anticipate to be the first quarter of 2014," he said.</p><p>"We believe that Munroe Regional Medical Center would strengthen our combined network of hospitals in Florida," Hawkins continued. "We also believe we could strengthen Munroe Regional Medical Center."</p><p>CHS and HMA executives held a conference call with Munroe trustees Friday afternoon and reiterated their commitment to the lease.</p><p>They said that when the merger of CHS and HMA is finalized, CHS will be the largest hospital company in the world, with 206 facilities, 31,000 beds and more than 100,000 employees in 29 states.</p><p>Twenty-six of those hospitals would be in Florida, so Munroe would become part of a sizable network of health care providers.</p><p>And, said Hawkins, CHS "is very focused on quality, physician relationships and employee relationships and doing the right things in the community."</p><p>Despite the company's assurances, some Munroe trustees noted that they are not as familiar with CHS as they are with HMA, which impressed them with its commitment to patient care.</p><p>"I've been to Publix grocery stores and I have a feel for what Publix is like," said trustee David Cope. "And now (HMA) are being bought out by someone who's bigger than them and I don't know whether they're a Walmart, a Target or a Whole Foods."</p><p>Trustee Chairman Jon Kurtz said he planned to organize trips to some of CHS' hospitals to investigate how the company runs its facilities and get a feel for its "culture."</p><p>In the meantime, Kurtz, hospital attorneys and consultants will continue hammering out a lease with HMA.</p><p>These negotiations are considered crucial because the lease will spell out not just HMA's — ultimately CHS' — monetary commitment to Munroe but also its obligations to provide certain kinds of services and live up to specific quality standards.</p><p>Trustees and HMA had hoped to have the lease finished by the end of August, spend 60 days reviewing the completed product and then sign off on it at the end of October.</p><p>That time frame could be pushed back a bit as trustees work to familiarize themselves with CHS.</p><p>Munroe CEO Steve Purves, who is leaving in a matter of weeks to take over a not-for-profit hospital system near Phoenix, said the deal could bolster Munroe significantly.</p><p>"At the end of the day, if we do this right, Munroe is going to be positioned stronger than it ever has been," Purves said.</p>